MBA: Interest rates to increase four times in 2018

Mortgage Bankers Association expects another two in 2019

The Mortgage Bankers Association expects the Federal Reserve to increase interest rates four times over the course of this year.

During Thursday’s general economic outlook session at MBA’s Servicing conference, Joel Kan, MBA’s associate vice president of industry surveys and forecasts, told conference attendees that the organization expects four increases in 2018 and another two increases in 2019.

Kan said there is an expectation for a rising rate environment, given the domestic economic fundamentals against the job market. Increasing inflation and a strengthening economy feeds into the assumption that the Fed will raise rates, Kan told attendees.

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As for the housing market, MBA is expecting an increase in home sales over the next couple of years, Kan said. “Purchase activity has been slow to grow but it’s coming back.”

“For a lot of us here, we’re concerned about originations and where that’s going to go,” he said.

MBA’s forecast shows an upward path for originations and a decline in refinances.

“As you know, rates have been going up and we’ve been seeing a lot less refi activity at similar levels than we have in the past but that’s going to be more than offset by the purchasing growth in the next several years, Kan told attendees.

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Commentary

For the first time since 1981, our industry is experiencing a rising interest rate environment. Some people may assume that the current market shift means their business will take a downward turn from which they will never recover. I don’t buy it. The way I see it, challenging times force us to refine our processes and practices.